Scribd Logo
Upload

Welcome to Scribd!

  • 15 views

    Decision Theory

    Uploaded by

    Seyfe Mesay
    The document discusses the concept of risk from the perspective of different stakeholders. It states that what one stakeholder views as a risk, another may not due to differing areas of responsibility. For example, a delay in materials is a risk to the project manager but not procurement. Similarly, a project could be seen as risky or an opportunity depending on a stakeholder's goals. Considering each stakeholder's perspective helps ensure risks are properly managed and stakeholders are aware of potential impacts.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Decision Theory

    Uploaded by

    Seyfe Mesay
    15 views3 pages
    The document discusses the concept of risk from the perspective of different stakeholders. It states that what one stakeholder views as a risk, another may not due to differing areas of responsibility. For example, a delay in materials is a risk to the project manager but not procurement. Similarly, a project could be seen as risky or an opportunity depending on a stakeholder's goals. Considering each stakeholder's perspective helps ensure risks are properly managed and stakeholders are aware of potential impacts.

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document discusses the concept of risk from the perspective of different stakeholders. It states that what one stakeholder views as a risk, another may not due to differing areas of responsibility. For example, a delay in materials is a risk to the project manager but not procurement. Similarly, a project could be seen as risky or an opportunity depending on a stakeholder's goals. Considering each stakeholder's perspective helps ensure risks are properly managed and stakeholders are aware of potential impacts.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    15 views3 pages

    Decision Theory

    Uploaded by

    Seyfe Mesay
    The document discusses the concept of risk from the perspective of different stakeholders. It states that what one stakeholder views as a risk, another may not due to differing areas of responsibility. For example, a delay in materials is a risk to the project manager but not procurement. Similarly, a project could be seen as risky or an opportunity depending on a stakeholder's goals. Considering each stakeholder's perspective helps ensure risks are properly managed and stakeholders are aware of potential impacts.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    I agree that the terms "project risks" and "risky projects" are better used in the context of specific

    project stakeholders. The concept of risk is inherently subjective and depends on the perspective of the
    stakeholder. What may be considered a risk to one stakeholder may not be seen as a risk to another.

    For example, a delay in the delivery of materials may be seen as a risk to the project manager who is
    responsible for meeting project timelines. However, it may not be seen as a risk by the procurement
    department, who may have already procured the necessary materials.

    Similarly, the concept of a "risky project" can vary depending on the perspective of the stakeholder. A
    project may be considered risky to the project sponsor if it has a high likelihood of failure or is expected
    to generate low returns. However, the same project may be seen as an opportunity by the project team,
    who may view it as a chance to develop new skills and capabilities.

    Therefore, it is important to consider the perspective of the specific stakeholder when discussing project
    risks and risky projects. This can help ensure that risks are appropriately identified and managed and
    that stakeholders are aware of the potential impact of the project on their respective areas of
    responsibility.

    In conclusion, while the terms "project risks" and "risky projects" are commonly used in project
    management, they are best used in the context of specific stakeholders. This helps ensure that the risks
    are appropriately identified and managed, and that stakeholders are aware of the potential impact of
    the project on their respective areas of responsibility.

    2. A risk matrix is a common tool used in project management to evaluate and prioritize risks based on
    their likelihood and impact. The following steps are suggested for the preparation of a risk matrix:

    1. Identify Risks: The first step in preparing a risk matrix is to identify potential risks that could impact
    the project. This can be done through various techniques such as brainstorming, expert judgment, and
    historical data analysis.
    2. Define Risk Criteria: The risk criteria should be defined in terms of likelihood and impact. Likelihood
    refers to the probability of the risk occurring, while impact refers to the potential consequence of the
    risk.

    3. Determine Likelihood and Impact Levels: The likelihood and impact levels can be determined based
    on the specific project context and the experience of the project team. For example, likelihood levels
    may be defined as rare, unlikely, possible, likely, or almost certain, while impact levels may be defined as
    insignificant, minor, moderate, major, or catastrophic.

    4. Assign Risk Scores: The likelihood and impact levels can be used to assign a numerical score to each
    risk. For example, a risk with a high likelihood and high impact would have a higher score than a risk with
    a low likelihood and low impact.

    5. Plot Risks on the Risk Matrix: The risk scores can be plotted on the risk matrix, which typically consists
    of a grid with likelihood levels on one axis and impact levels on the other axis. The resulting matrix can
    help prioritize risks based on their overall risk score.

    6. Develop Risk Response Strategies: Once the risks have been prioritized, risk response strategies can
    be developed to mitigate or avoid the most significant risks. This may involve taking actions to reduce
    the likelihood or impact of the risk, transferring the risk to another party, accepting the risk, or avoiding
    the risk altogether.

    7. Monitor and Update the Risk Matrix: The risk matrix should be monitored and updated regularly
    throughout the project lifecycle to reflect changes in the project context and any new risks that may
    emerge.

    In summary, the preparation of a risk matrix involves identifying potential risks, defining risk criteria,
    determining likelihood and impact levels, assigning risk scores, plotting risks on the matrix, developing
    risk response strategies, and monitoring and updating the matrix throughout the project lifecycle. By
    following these steps, project teams can systematically analyze and manage risks to help ensure project
    success.

    3.

    a) Opportunity risk is a concept that is closely related to the traditional view of risk, but focuses on the
    positive outcomes that could result from uncertain events. In the framework of the "dual view" of risk,
    opportunity risk is seen as the flip side of the traditional view of risk, which is focused on avoiding
    negative outcomes. Essentially, opportunity risk refers to the possibility that an uncertain event could
    result in a positive outcome, such as increased profits, improved performance, or new opportunities.

    To illustrate this concept, consider a project that is facing a risk of a delay in the delivery of key
    materials. From the traditional view of risk, this delay could result in increased project costs, missed
    deadlines, and potentially negative impacts on project stakeholders. However, from the perspective of
    opportunity risk, this delay could also provide an opportunity to explore new materials or suppliers,
    improve project design, or identify cost savings.

    b) There are several possible ways or approaches to opportunity risk management, including:

    1. Opportunity Identification: The first step in managing opportunity risk is to identify potential
    opportunities that could result from uncertain events. This can be done through techniques such as
    brainstorming, scenario planning, and market analysis. The key is to identify potential positive outcomes
    that could result from uncertain events and to develop a plan to take advantage of those outcomes.

    2. Opportunity Assessment: Once potential opportunities have been identified, they should be assessed
    in terms of their likelihood and potential impact. This can help project teams prioritize opportunities and
    focus their resources on the most promising ones.

    3. Opportunity Exploitation: To exploit opportunities, project teams may need to adjust their project
    plans, allocate resources, or modify project objectives. This may involve taking calculated risks, being
    open to new ideas and perspectives, and being willing to experiment and learn from mistakes.

    4. Opportunity Monitoring and Control: Finally, project teams should monitor and control opportunity
    risks throughout the project lifecycle to ensure that they are being effectively managed and that project
    objectives are being achieved.

    In summary, opportunity risk is a concept that recognizes the potential positive outcomes that can result
    from uncertain events. To manage opportunity risk effectively, project teams should identify potential
    opportunities, assess their likelihood and impact, exploit them through appropriate actions, and monitor
    and control them throughout the project lifecycle.

    You might also like